Phoenix was one of the hardest-hit housing markets in the downturn. But lately, the metro area is outperforming many other markets, showing sharp increases in home prices and drops in inventories.

“The Phoenix market will be a benchmark city to monitor for residents in Las Vegas, the Inland Empire of California, and … the Florida market,” says Lawrence Yun, chief economist with the National Association of REALTORS®.

Median prices for homes in Phoenix soared about 30 percent in May year-over-year. What’s more, Phoenix has posted big inventory drops, with about half as many homes for-sale now than last year at this time.

One key to its real estate recovery: the pick up in its job market, with a decreasing unemployment rate in recent months. Yun says that other markets with sluggish job markets will likely see a slower recovery in real estate.

Another key to Phoenix’s recovery: Arizona’s system allows it to work more quickly through foreclosures because they don’t have to be court-approved. Phoenix was plagued with foreclosures, having one of the highest rates in the country, but it continues to work through its backlog more quickly than states that have a judicial process for foreclosures.

Investors also are taking advantage of housing deals in Phoenix, and multiple bids for homes are becoming much more common.

In fact, “now we’ve got too few homes [for sale],” Michael Orr, director of the Center for Real Estate Theory and Practice at Arizona State University, told CBS News. “Everybody’s wishing the investors would go away and stop buying, but the investors are still here buying everything they can with cash, which makes it pretty difficult for ordinary home buyers to compete.”